LPB released H1 2022 results with TOI of VND7.0tn (USD306mn; +47.3% YoY) and bottom-line net profit of VND2.9tn (USD123mn; +76.5% YoY), achieving 52.7% and 59.7% of our FY2022 forecasts, respectively. Excluding our upfront banca fee assumption, H1 2022 net profit completed 70.8% of our full-year forecast. The impressive increase in NPAT was mainly due to (1) a 39.9% YoY increase in NII, (2) 33.3% YoY increase in pure NFI, (3) VND347bn gain from investment securities vs VND2bn in H1 2021, which we believe could have mainly come from the sale of a stake in STB held by LPB, (4) VND206bn gain from net other income vs VND38bn in H1 2021, and (5) 17.6% YoY increase in OPEX that significantly lagged TOI growth. These factors were partly offset by a 54.1% YoY increase in provision expenses. On a QoQ basis, Q2 2022 NPAT was VND1.4tn (+1.0% QoQ). We see potential upside to our earnings forecasts for LPB, pending a more extensive review.

After negative credit and deposit growth in Q1 2022, LPB used up the majority of its initial credit quota in Q2 2022. While LPB’s credit balance decreased 0.60% QoQ and deposits to customers decreased 1.56% QoQ in Q1 2022, its credit balance increased 9.23% QoQ and deposits to customers increased 4.69% QoQ in Q2 2022. LPB reduced the entirety of its corporate bond position of VND19bn in Q1 2022; as of Q2 2022, it no longer had corporate bonds on its balance sheet. LPB’s 6M 2022 credit growth was 8.56% vs its initial credit quota of 10%.

Strong H1 2022 NII growth was backed by YoY NIM expansion. LPB reported that NII increased 39.9% YoY thanks to (1) a 57-bp YoY expansion in NIM to 4.13% which was mainly derived from a 74-bp YoY decline in COF that outweighed a 24-bp YoY decrease in IEA yield and (2) a higher pace of 6M 2022 loan growth compared to deposit growth (8.60% and 3.06%, respectively). LPB stated the increase in the retail lending portion and the collection of interest on restructured loans were the reasons behind the strong NII growth. On a QoQ basis, Q2 2022 NII increased 5.9% QoQ with NIM recording a 14-bp QoQ expansion as a 17-bp QoQ increase in the IEA yield outweighed an 8-bp QoQ increase in COF in the quarter.